USD/JPY Forecast – US Dollar Continues to Grind Against The Yen

US Dollar vs Japanese Yen Technical Analysis

Taking a look at the dollar yen pair and looking at the chart, you can see that the US dollar continues to stagnate against the Japanese yen. However, I would postulate that it’s actually a good thing. After all, we’re just hanging around towards the most recent high and we are looking to break out to the upside.

The 152 yen level is an area that a lot of people will be paying attention to and if we can break above there, then we can really start to take off. On the other hand, if we drop from here, the 149.80 yen level is an area that I think a lot of buyers will defend. And then after that, you have the 148.50 yen level, which is also starting to attract the attention of the 50-day EMA. So, all things being equal, this remains very much the same market that it has been for quite some time, and that is a buy on the dips market.

While the Federal Reserve is anticipated to raise rates three times this year, the Japanese Central Bank, of course, is likely not to at all. They have far too much debt, and while some people think that they may raise rates a tenth of a percent, that still is going to be a massive interest rate differential that you could drive a truck through between both of these currencies. So as long as that’s the case, you get paid to hang on to them.

It makes no sense to short this pair anytime soon because of that. Look at this as a market that is building up inertia to finally break out to the upside and although it does seem to be taking its time, there’s really nothing on the chart that suggests that anything’s changing. It’s just a simple investment that a lot of people hold on to and they get paid at the end of every day a little bit via the swaps. With that being said, if we were to break down below the 147.33 yen level, then we have to question whether or not momentum will pick back up.

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